An Overview of Title Insurance

Title insurance shares many common features with everyday home or car insurance. With title insurance, you pay a premium to protect yourself against loss or damage suffered because of problems with title to your property. Like all other insurers – life, home, automobile – they assess the degree of risk involved with a particular insurance policy before issuing the policy, the same as title insurers.

Before agreeing to provide coverage for a particular title, they title insures determine the degree of risk with respect to the specific property. A title insurance policy is usually obtained at the time the property is purchased and/or when a mortgage is being registered, but it may also be purchased by existing homeowners who did not obtain title insurance when the home was purchased.

Title insurance policies can be issued in favour of both buyers of real property and lenders of money to buy the real property. A policy issued in favour of a buyer, called an owner’s policy, remains in effect if the insured has title to the property. A lender’s policy covers the principal amount of the mortgage and lasts for the duration of the loan.

Generally, the owner of a title insurance policy is insured against title problems that were in existence at the time the policy purchased, both “on-title” and “off-title.” On-title matters are those that are reflected in the registered title to the property and include: conflicting ownership interests in the property, any charge, lien, or encumbrance on or other defect in the title, unmarketability of title, and lack of right of access to and from the property. Off-title matters are those that are not reflected in the registered title to property and include: work orders, zoning issues, defects that would have been reveled by an up-to-date survey, and realty tax arrears.

The risk of having no title insurance may include, but not limited to, unpaid property taxes from prior owners, and without title insurance, will become a financial burden that rests solely with the new buyer.